AIMD-99-114 Year 2000 Computing Crisis: … 1999 YEAR 2000 COMPUTING CRISIS Readiness of the ... and the reported readiness status of the electric power ... or distributing electric

GAOUnited States General Accounting Office

Report to the Committee on the Year 2000 Technology Problem, U.S. Senate

April 1999 YEAR 2000 COMPUTING CRISIS

Readiness of the Electric Power Industry

GAO/AIMD-99-114

United States

General Accounting Office

Washington, D.C. 20548 Letter

Page 1 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power Industry

GAOAccounting and Information

Management Division

B-280845 Letter

April 6, 1999

The Honorable Robert F. BennettChairmanThe Honorable Christopher DoddVice Chairman Special Committee on the Year 2000 Technology ProblemUnited States Senate

A continuous, adequate supply of electric power as we move into the next century is critical for our national economy and the safety and well being of the public. At your request, we identified the electric power industry’s vulnerability to Year 2000 problems and the reported status of Year 2000 readiness. On February 22, 1999, we briefed your office on the results of our work. The briefing slides are included in appendix I.

This report provides a high-level summary of the information presented at that briefing, including background information, the Year 2000 vulnerabilities, and the reported readiness status of the electric power industry. This report also presents the suggestions we made to the Department of Energy and the Nuclear Regulatory Commission concerning actions to (1) reduce the risk that a number of entities generating, transmitting, or distributing electric power will not meet the June 1999 industry Year 2000 readiness milestone and to (2) ensure that utility customers have adequate information about the risks of power outages in their service area.

Result in Brief All phases of operations in the electric power industry--from generation to distribution--use control systems and equipment that are subject to Year 2000 failures. While the electric power industry has reported that it has made substantial progress in making its equipment and systems ready to continue operations into the Year 2000, significant risks remain. In response to a November 1998 industry-wide survey, the nation’s electric power utilities reported that, on average, they were 44 percent complete with remediation and testing. However, almost half of the reporting organizations said that they did not expect to be Year 2000 ready within the June 1999 industry target date, and about one sixth of the respondents indicated they would not be ready until the last 3 months of 1999—leaving little time margin for resolving unexpected problems.

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Background The United States electric power industry comprises about 3,200 electric utilities, with about 700 of the utilities operating power generation facilities.1 Some utilities are exclusively transmission or distribution entities--utilities that purchase wholesale power from others to distribute, over their own transmission and distribution lines, to individual customers.

In North America, there are 136 control areas2 responsible for coordinating the generating, transmission, and distribution activity within their specific geographic areas. A control area is the basic operating unit of the electric power industry. Each control area manages its generation to meet electricity demand and fulfill exchange obligations. They must be in direct control of their transmission systems and generators to continuously balance power supply with demand in order to meet customer needs and prevent damage to equipment.

The control areas in the continental United States, Canada, and a small area in northern Mexico are part of three interconnected grids. For these grids, the North American Electric Reliability Council (NERC) sets the operating and engineering standards for reliability.

Electric Industry Is Vulnerable to Year 2000 Failures

The industry is dependent on computer control systems and embedded systems that are susceptible to Year 2000 failures. The industry’s analysis of its embedded systems has shown that the Year 2000 problem places the nation’s electric power systems at risk. Because of the high voltages used in the transmission of electric power, and the speed at which an electrical disturbance can cascade through the system, the security3 of the system is maintained through an extensive network of automatic protection devices. These devices, including circuit breakers and relays, are usually centrally monitored and controlled by computer systems generally known as supervisory control and data acquisition (SCADA) systems.

1This excludes nonutilities--privately owned entities that generate power for their own use and/or for sale to utilities and others.

2In addition to the 136 control, areas there are about 64 operating centers sharing responsibility for the monitoring and control of the bulk electric power systems in the North America.

3System security is defined as the ability of the electric system to withstand sudden disturbances such as electric short circuits or unanticipated loss of system elements.

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Virtually all of the SCADA systems and many of the devices use embedded microprocessors and systems that may have, or are known to have, Year 2000 problems. All phases of operations--from generation to distribution--use control systems and equipment that are subject to Year 2000 failures.

Resolution of Year 2000 problems in control systems and equipment used in the electric power industry is essential for a dependable supply of electricity necessary for transportation, industrial operations, home heating, and other activities that affect our daily lives. The President’s Council on Year 2000 Conversion--working with the Department of Energy and with industry associations led by NERC--is assessing industry’s progress in addressing Year 2000 issues. This is consistent with recommendations that we made to the President’s Council in April 1998 to institute a sector based approach with needed public/private partnerships and to make assessments of industry readiness.4

Progress in Year 2000 Readiness But Risks Remain

The electric power industry has made substantial progress in making its equipment and systems ready to continue operations into the Year 2000, but significant risks remain. In January 1999, NERC reported the findings of its November 1998 survey, with about 98 percent of the electricity supply and delivery organizations participating in the assessment process. The survey respondents reported that on average they were 44 percent complete with remediation and testing. About half of the reporting organizations said that they expected to be Year 2000 ready within the June 1999 industry target date.

About 46 percent of the bulk power entities reported to NERC that they expect to miss the industry Year 2000 readiness target date of June 1999. This 46 percent includes 16 percent that are not expected to be ready until the 4th quarter of 1999. In addition, 20 nuclear power plants reported that they would not meet the industry Year 2000 readiness milestone of June 1999.

NERC, concerned about the slow pace of the Year 2000 effort, plans to more closely monitor the status of those facilities that may be at risk of failure and increase its supervisory activities. In addition, its regional

4Year 2000 Computing Crisis: Potential for Widespread Disruption Calls for Strong Leadership and Partnerships (GAO/AIMD-98-85, April 30, 1998).

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councils plan to coordinate drills to ensure that personnel and systems are ready for operations during the Year 2000 transition.

Federal organizations engaged in power production and transmission reported similar Year 2000 status for their facilities. Energy’s power marketing administrations reported that they will be Year 2000 ready within the industry target date; the Corps of Engineers in the 3rd quarter of 1999; and the Bureau of Reclamation and the Tennessee Valley Authority in the 4th quarter of 1999.

Suggested Actions As discussed in the briefing, in order to reduce the risk that a number of entities generating, transmitting, or distributing electric power will not meet the June 1999 Year 2000 readiness milestone, and to ensure that utility customers have adequate information about the risk of power outages in their service areas, on February 19, 1999, we met with Department of Energy officials and suggested that they:

• Work with the Electric Power Working Group to ensure that remediation activities are accelerated for the utilities that expect to miss the June 1999 deadline for achieving Year 2000 readiness. This would include revising outage schedules to perform renovations prior to the industry target date, where feasible, and adding resources if necessary to accelerate progress.

• Encourage state regulatory utility commissions to require a full public disclosure of Year 2000 readiness status of entities transmitting and distributing electric power-- including 136 control areas and the 3,000 entities operating North America’s distribution systems. Such disclosure should include the current readiness status, the projected date that readiness will be achieved, descriptions of the probable and worst case scenarios, and a public version of contingency plans.

In response to our suggestions, an Energy official said that the department agrees with the suggested actions in general. However, he noted that the department would probably not pursue the acceleration of schedules for those organizations whose systems are substantially ready except for a small amount of work. Concerning the dissemination of readiness status information, he said that Energy plans to coordinate the issue of public disclosure with state regulatory agencies.

As discussed in the briefing, to help ensure that all licensed nuclear power plants will identify and rectify any Year 2000 problems with their computer

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systems well before January 1, 2000, and that the public and the electric power industry is given adequate information about the Year 2000 readiness status of individual nuclear power plants, on February 12, 1999, we suggested that Nuclear Regulatory Commission (NRC):

• In cooperation with the Nuclear Energy Institute, work with the nuclear power plant licensees to accelerate the Year 2000 remediation efforts among the nuclear power plants that expect to miss the June 1999 deadline for achieving Year 2000 readiness. This would include revising outage schedules to perform renovations prior to the industry target date.

• Publicly disclose the Year 2000 readiness status of each of the nation’s operational nuclear reactors. The disclosure should include the date when each nuclear power plant is expected to be Year 2000 ready.

NRC officials stated that nuclear power licensees are required to report their Year 2000 readiness status on July 1, 1999. NRC plans to focus its efforts on nuclear power plants that may miss the July 1, 1999 milestone. NRC officials told us that NRC would release the information on the Year 2000 readiness of individual nuclear power plants in July 1999.

Objectives, Scope, and Methodology

As requested, our objectives were to identify the electric power industry’s vulnerability to Year 2000 problems and the reported status of Year 2000 readiness. To identify Year 2000 vulnerabilities in the industry, we reviewed federal agency and industry associations’ publications on the structure of the industry, and the use of date dependent embedded systems in the technical infrastructure. We also visited selected electric utilities and federal power generating and marketing agencies to obtain information about the extent of embedded systems vulnerabilities.

To identify the reported status of Year 2000 readiness, we reviewed and analyzed industry survey data collected by the electric power subgroup of the President’s Council on Year 2000 Conversion. Because of the large volume of the survey respondents and our limited access to source data, we did not validate the accuracy of reported information. We conducted our work at the Departments of Energy, the Interior, and Defense; the Federal Energy Regulatory Commission; the Nuclear Regulatory Commission; the Tennessee Valley Authority; selected electric utilities; and five electric power industry associations that conducted surveys for the electric power subgroup of the President’s Council. We performed our

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work from August 1998 through February 1999, in accordance with generally accepted government auditing standards.

We provided a copy of our briefing materials, which were used in preparing this report, to the Department of Energy officials representing the electric power working group of the President’s Council on Year 2000 Conversion. The Director, Office of Economic, Electricity, and Natural Gas Analysis of the Department of Energy gave us oral comments on the briefing. We have incorporated them as appropriate throughout this report. We have also provided copies of industry-wide findings to NERC, and copies of agency-related findings to key officials at Bureau of Reclamation, Army Corps of Engineers, Tennessee Valley Authority, Bonneville Power Administration, Southeastern Power Administration, Southwestern Power Administration, and Western Area Power Administration. We responded to their questions on these materials.

As agreed with your office, unless you publicly announce the contents of this report earlier, we will not distribute it until 30 days from its date. At that time, we will send copies to John Koskinen, Chairman of the President’s Council on Year 2000 Conversion; The Honorable Bruce Babbitt, Secretary of the Interior, The Honorable Bill Richardson, Secretary of Energy; Lt. Gen. Joe N. Ballard, Chief of Engineers and Commander, Army Corps of Engineers; Judi Johansen, Administrator, Bonneville Power Administration; The Honorable Shirley Jackson, Chairman, Nuclear Regulatory Commission; Craven Crowell, Chairman, Tennessee Valley Authority; The Honorable Jacob J. Lew, Director, Office of Management and Budget; and other interested parties. Copies will also be made available to others upon request.

We appreciate the help and cooperation extended to our audit team by leading industry associations--the North American Electric Reliability Council; the Edison Electric Institute; the American Public Power Association; and the National Rural Electric Cooperative Association. We would also like to express our appreciation to the following electric power companies: the Consolidated Edison Company of New York, New York; Easton Utilities, Easton, Maryland; Virginia Power, Surrey Power Station, Virginia; and the Los Angeles Department of Water and Power, Los Angeles, California.

If you have any questions on matters discussed in this letter, please call me at (202) 512-6253, or Mirko J. Dolak, Technical Assistant Director, at (202)

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512-6362; or James R. Hamilton, Assistant Director, at (202) 512-6271. Other major contributors to this report are listed in appendix II.

Joel C. WillemssenDirector, Civil Agencies Information Systems


Appendix I

Briefing on Electric Power Industry Year 2000 Readiness Appendix I

GAO Year 2000 Readiness

Briefing for Senate SpecialCommittee on the Year 2000

Technology Problemon

Electric Power Industry

Appendix I

Briefing on Electric Power Industry Year

2000 Readiness


2

GAO Purpose

Purpose of briefing is to provide the results of our review of the Year 2000readiness of the electric power industry. We will present

• Objectives, scope, and methodology• Background• Year 2000 vulnerability• Federal and industry efforts to assess Year 2000 status• Year 2000 readiness of electric power industry• Year 2000 readiness of federal electric power organizations• Suggested actions

Appendix I


2000 Readiness


3

GAO Objectives

The review objectives were to identify

• Year 2000 vulnerabilities in the electric power industry and

• the status of Year 2000 Readiness.

Appendix I


2000 Readiness


4

GAO Scope and Methodology

In assessing the domestic electric power industry’s vulnerability to Year2000 problems, we surveyed an extensive body of technical literature andindustry journals, searched and reviewed related documents from theInternet, reviewed federal agency and industry publications on the structureof the industry, and visited selected federal and private sector organizationsthat generate, transmit, and distribute electric power.

To identify the status of Year 2000 readiness, we reviewed and analyzedindustry survey data collected by the electric power subgroup of thePresident’s Council on Year 2000 Conversion, and Year 2000 programstatus data provided by federal organizations generating or marketingelectric power.

Because of the large volume of the survey respondents and our limitedaccess to private sector source data, we did not validate the accuracy ofreported information.

Appendix I


2000 Readiness


5

GAO Scope and Methodology (cont’d)

In the federal sector we conducted our work at

• Department of Energy;• Department of the Interior;• Department of Defense;• Federal Energy Regulatory Commission;• Nuclear Regulatory Commission;• Tennessee Valley Authority, Chattanooga, Tennessee;• Bonneville Power Administration, Portland, Oregon;• Western Area Power Administration, Denver, Colorado; and• Army Corps of Engineers, Washington DC and Portland, Oregon;

Appendix I


2000 Readiness


6

GAO Scope and Methodology (cont’d)

In the private sector, we conducted our work at

• North American Electric Reliability Council;• Edison Electric Institute;• American Public Power Association;• National Rural Electric Cooperative Association;• Nuclear Energy Institute;• Consolidated Edison Company of New York, New York;• Easton Utilities, Easton, Maryland;• Virginia Power, Surry Power Station, Virginia; and• Los Angeles Water and Power, Los Angeles, California.

We performed our work from August 1998 through February 1999, inaccordance with generally accepted government auditing standards.

Appendix I


2000 Readiness


7

GAO Background - Ownership of Electric Utilities

• The United States electric powerindustry is comprised of about3,200 electric utilities, with about700 utilities operating powergeneration facilities.

• There are four types of utilities:

� 244 investor-owned,� 7 federal,� 2,014 publicly-owned, and� 931 cooperatives.

Existing Generating Capacity byType of Utility, 1997

Federal 9%

Investor owned 74%

Cooperative 4%

Publicly owned 12%

Other 1%

Source: Energy Information Administration,Department of Energy

Appendix I


2000 Readiness


8

GAO Background - Primary Energy Sources

• In 1997, the reported capacity of U.S.utilities totaled about 710,000megawatts.

• Primary energy sources:

� 43% Coal-fired� 19% Gas-fired� 14% Nuclear� 13% Hydroelectric� 10% Petroleum� 1% Other

HydroelectricPower Plant

NuclearPower Plant

Fossil FuelPower Plant

Nuclear, coal-fired, andhydroelectric power plantsTennessee Valley Authority

Source: Tennessee Valley Authority

Appendix I


2000 Readiness


9

GAO Background - Electric Grid Structure

• The North American Electric Reliability Council (NERC) sets theoperating and engineering standards for the reliability of electric systemsin North America

• NERC is a voluntary not-for-profit organization made up of 10 RegionalReliability Councils. NERC and its regions account for nearly every bulkelectric supply and delivery organization in the three Interconnections ofNorth America

Appendix I


2000 Readiness


10

GAO Background - Electric Grid Structure (cont’d)

• The electric systems in NorthAmerica are connected into threemajor grids or Interconnections.

• Each Interconnection contains anumber of control areas. Thereare 136 control areas in NorthAmerica.

The Three NERCInterconnections in North

America

WesternInterconnection

ERCOTInterconnection

EasternInterconnection

Source: NERC.

Appendix I


2000 Readiness


11

GAO Background - Electric Grid Structure (cont’d)

• In North America, thecoordination of generating,transmission, and distributionactivity within a specificgeographic area is implementedthrough the 136 control areas.

• Each control area must be indirect control of its transmissionsystems and generators tocontinuously balance powersupply with demand.

Nuclear power

Fossil fuel power plant

Control center Industrialcustomer

Substation

Distributionsystems

Distributionsystem

Substation

Substation

Substation

Interconnection

Substation

Public &private

networks

A Simple Control Area

Adapted from: Electric Power Wheeling and Dealing,Office of Technology Assessment, May 1989.

Appendix I


2000 Readiness


12

GAO Year 2000 Vulnerability

The industry is dependent oncomputer control systems andembedded systems that are subjectto Year 2000 failures.

Control systems include:

• Supervisory Control and DataAcquisition (SCADA),

• Automatic Generation Control(AGC), and

• Energy Management Systems(include SCADA & AGC systems).

The control systems manage the gridand its protective devices, includingthose with embedded systems.

Utility Control Center withSCADA Displays and Mapboard

Appendix I


2000 Readiness


13

GAO Year 2000 Vulnerability - SCADA Systems

A simple SCADA System

Power plantgeneratorsTransformersCircuit breakersSwitchesReclosersCapacitor bankcontrollers

Primarycomputer

Backupcomputer

Communicationsinterface

Local consolecontroller

Controlroommapboard

RTUfunctions

Analogrecorders

Digitaldisplays

Links toother computersystem(s)Remote consolesRemote loggers

statusalarmevents

sequencediagnostics

trip/closeraise/loweropen/closestop/start Local

remoteterminal

unit (RTU)

Controlroomoperator/dispatcher

Protectionrelays

Transducers

Remoteterminalunit(s)

Adapted from: IEEE Standard Definition, Specification, and Analysis of Systems Usedfor Supervisory Control, Data Acquisition, and Automatic Control, November 1994.

Appendix I


2000 Readiness


14

GAO Year 2000 Vulnerability - Embedded Systems

• Embedded systems are computersused to monitor or control theoperation of devices, machines, orplants.

• In some instances, the embeddedsystems contain microprocessorsproviding timing and calendarfunctions. These “real time clocks”allow the system to manage timedcontrol sequences, keep track ofequipment maintenance events, ortime-stamp system events.

• Systems containing “real timeclocks” may malfunction orexperience a total failure.

Embedded Microprocessors inProtection Relay

Appendix I


2000 Readiness


15

GAO Year 2000 Vulnerability - Embedded Systems(cont’d)

The electric power industry uses awide range of embedded devices,including remote terminal units,protection relays, andprogrammable logic controllers.

The embedded devices monitorand control generators, circuitbreakers, switches, and other keyelements of the electric grid.

The embedded devices aresupervised or controlled by EMSor SCADA systems.

Programmable Logic Controllersin 500,000 Volt Circuit Breaker

Appendix I


2000 Readiness


16

GAO Year 2000 Vulnerability - Potential Impacts

NERC has identified a large number of Year 2000-related risk factors thatmay impact the operation of electric power systems. The internal riskfactors include generator outages, constrained operation of nuclear powerplants, partial loss of EMS/SCADA systems, loss of portions of company-owned data and voice communications, and a failure of environmentalcontrol systems. According to the assumptions suggested by NERC forcontingency planning purposes

• a probable scenario may include 10% to 15% loss of generation, theloss of wire-based voice and data communications, and the partialloss of EMS/SCADA systems.

• a credible worst case scenario might result in area blackout caused bythe long-term loss of generating and control facilities, and the loss offuel supplies.

Appendix I


2000 Readiness


17

GAO Federal and Industry Efforts to Assess Year 2000Status

• The President’s Council on Year 2000 Conversion is assessing the Year2000 readiness of the nation’s infrastructure.

• The President’s Council has established an Electric Power WorkingGroup, led by the Department of Energy, to assess the readiness of theelectric power industry.

• Energy has asked the North American Electric Reliability Council toassess whether the nation’s electric industry is adequately prepared toaddress the Year 2000 problem.

Appendix I


2000 Readiness


18

GAO Federal and Industry Efforts to Assess Year 2000Status (cont’d)

NERC and industry associations aresurveying their members’ Y2Kassessment programs.

• NERC - Control Areas and bulkpower entities

• EEI - Investor-owned utilities

• APPA - municipal utilities

• NRECA - Rural cooperatives

• NEI - Nuclear power industry

• CEA - Canadian utilities

President’s Council onYear 2000 Conversion

President’s Council onYear 2000 Conversion

Energy Working Group

Electricity (DOE)

Energy Working Group

Electricity (DOE)

NERCNERC

• Edison Electric Institute (EEI)• American Public Power Association

(APPA)• National Rural Electric Cooperative

Association (NRECA)• Nuclear Energy Institute (NEI)• Canadian Electric Association (CEA)

Appendix I


2000 Readiness


19

GAO Year 2000 Readiness of Electric Power Industry

• 46 percent of the reporting bulk power entities,

• 20 of 66 nuclear power plants,

• 26 percent of municipal distributors, and

• 10 percent of cooperative distributors.

While the electric power industry has made substantial progress inmaking its equipment and systems ready to continue operations intothe Year 2000, significant risks remain. According to NERC’s survey,the industry Year 2000 readiness target date of June 1999 isexpected to be missed by

Appendix I


2000 Readiness


20

GAO Reported Year 2000 Readiness of Electric PowerIndustry - Control Areas and Bulk Power Utilities

Average percent completed

Inventory

Assessment

Remediation/testing28%

65%

87%

44%

82%

96%

0% 20% 40% 60% 80% 100% 120%

4th Qtr 1998

3rd Qtr 1998

Reported Control Area andBulk Power Utilities

Readiness Status, November1998

Within the overall 44% completion ofremediation and testing reported inNovember 1998, the control areas andbulk power systems reportedcompleting remediation and testing foraverage of

• 42% for nonnuclear generationfacilities,

• 48% for energy management andtelecommunications systems, and

• 53% for substation controls andsystem protective equipment.

Appendix I


2000 Readiness


21

GAO Year 2000 Readiness of Electric Power Industry -Control Areas and Bulk Power Utilities (cont’d)

The reasons utilities gave to NERCfor missing the target date included

11%

43%

30%

16%

0%

10%

20%

30%

40%

50%

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Control Areas and BulkPower Utilities’ Projected

Readiness by 1999 Quarter• renovations would be performed at

the next scheduled outage (plantshutdown for maintenance andrepairs)

• remediation can not be completeduntil vendor supplied equipment orsystems are received

Appendix I


2000 Readiness


22

GAO Year 2000 Readiness of Electric Power Industry -Nuclear Power Plants

NEI reported similar reasons as to why 20 of the 66 nuclear power plantswould not achieve readiness until after the industry target date:

• renovations would be performed at the next scheduled outage,

• remediation can not be completed until vendor supplied equipment orsystems are received, and

• “the scope of work involved.”

Appendix I


2000 Readiness


23

GAO Year 2000 Readiness of Electric Power Industry -Power Distributors

In 4th quarter of 1998, distributors reported to APPA and NRECA that theindustry target date for readiness will be missed by

• 23 percent of the municipal distributors and

• 10 percent of the cooperative distributors.

The readiness of a large percent of the distributors is uncertain becauseabout 73 percent of the municipal and about 23 percent of the cooperativedistributors did not report their status.

Appendix I


2000 Readiness


24

GAO Planned Industry and Regulatory Actions

NERC plans to more closely monitor the status of those facilities that maybe at risk of failure and increase its supervision of their Year 2000activities, including contacting their chief executives.

In addition, NERC Regional Reliability Councils will coordinate drills toensure that personnel and systems are ready for operations during theYear 2000 transition. The first drill, focused on communications, will beheld in April 1999. The second drill, scheduled for September 1999, willrehearse the Year 2000 rollover.

NEI did not plan to take any specific actions concerning the nuclear plantsthat do not expect to meet the June 1999 industry target date forreadiness.

APPA and NRECA did not specify in their reports any actions they plan totake concerning the power distributors that do not expect to meet theJune 1999 industry target date for readiness.

Appendix I


2000 Readiness


25

GAO Federal Electric Power Facilities - Power Generation

Federal organizations operate power generation and transmission acrossmost of the United States. The Army Corps of Engineers and the Bureau ofReclamation operate hydroelectric plants. The Tennessee Valley Authority(TVA) operates hydroelectric, fossil fuel, combustion turbine, and nuclearpower plants. The numbers of power plants operated by these federalorganizations are:

Percent ofOrganization U.S. power Facilities

Corps of Engineers 2.8% 75 hydroelectric plantsBureau of Reclamation 1.5% 59 hydroelectric plantsTVA 4.4% 30 hydroelectric plants

11 fossil fuel plants 4 combustion turbine plants 3 nuclear plants

Appendix I


2000 Readiness


26

GAO Federal Electric Power Facilities - Transmission

The Department of Energy’s Power Marketing Administrations (PMAs)market and transmit the power produced by the Corps of Engineers and theBureau of Reclamation. TVA also markets and transmits the power itproduces. The transmission function involves the operation of control areaand the maintenance of transmission lines. The facilities operated by theseorganizations include:

Organization Facilities

Bonneville PMA 15,000 miles of transmission lines, 363 substationsSoutheastern PMA Leases transmission linesSouthwestern PMA 1,380 miles of transmission lines, 24 substationsWestern PMA 16,800 miles of transmission lines, 258 substationsTVA 17,000 miles of transmission lines, 535 substations

Appendix I


2000 Readiness


27

GAO Year 2000 Readiness of Federal Electric PowerFacilities

The federal organizations engaged in power production and transmissionparticipated in the November 1998 NERC survey. While the industryaverage was reported to be 44% for remediation and testing, the federalorganizations generally reported a higher level of completion, as follows:

Percent completeOrganization November 1998

• Corps of Engineers 66%• Bureau of Reclamation 50%• TVA 68%• Bonneville PMA 37%• Southeastern PMA 80%• Southwestern PMA 10%• Western PMA 60%

Appendix I


2000 Readiness


28

GAO Year 2000 Readiness of Federal Electric PowerFacilities (cont’d)

Most of the Federal organizations did not expect to achieve readiness by theJune 30, 1999, industry target date, according to their November 1998responses to the NERC survey.

Organization Projected Readiness

Corps of Engineers 3rd quarter 1999Bureau of Reclamation 4th quarter 1999TVA 4th quarter 1999Bonneville PMA 2nd quarter 1999Southeastern PMA 3rd quarter 1999Southwestern PMA 4th quarter 1999Western PMA 2nd quarter 1999

In January 1999, Southeastern and Southwestern PMAs told us they hadaccelerated their schedules and expect to achieve readiness in the 2nd

quarter of 1999. Thus, the four DOE PMAs plan to meet the July 1, 1999,readiness milestone. TVA also revised its schedule for power plants andexpects to achieve readiness in the 2nd quarter 1999 for all but one of its fossilfuel plants.

Appendix I


2000 Readiness


29

GAO Reasons Federal Facilities Readiness Will MissIndustry Target Date

The reasons given to us by the Federal organizations for not meeting theindustry target date for readiness varied:

Corps of Engineers

The Corps reported that power plants in four of its districts would notachieve readiness until the last half of 1999. The Corps’ Year 2000program officials explained that the remediation and testing at thesefacilities would be complete by the June 1999 industry target date, but testdocumentation and contingency plans are not expected to be completeduntil the last half of the year.

Appendix I


2000 Readiness


30

GAO Reasons Federal Facilities Readiness Will MissIndustry Target Date (cont’d)

Bureau of Reclamation

The Bureau of Reclamation projects that 7 of its 59 power generationfacilities will not be Year 2000 ready until the last half 1999. Reclamationofficials explained that the SCADA systems are being replaced in thesefacilities and the work is not scheduled to completed until the last half of1999. They further explained that these SCADA systems are part of alarge modernization effort that encompasses remote and local controlsystems for many types of major equipment at the dams, including gates,outlet valves, and monitoring systems for flood control and water quality.

Appendix I


2000 Readiness


31

GAO Reasons Federal Facilities Readiness Will MissIndustry Target Date (cont’d)

TVA

TVA officials explained that five fossil plants will not meet the industrytarget date for readiness because they will not make the Year 2000renovations at these plants until the next scheduled outages formaintenance and repair in November and December 1999. Becausethese fossil fuel facilities represent about 26 percent of TVA’s electricitycapacity, Year 2000 failures could have had a significant impact. Inresponse to our concern with the risks associated with this schedule, TVAofficials examined the incremental costs of rescheduling the outages forthese plants and decided to move the scheduled outage to June 1999 forthree plants, including two with the highest generation capacity.

Appendix I


2000 Readiness


32

GAO Suggested Actions

Department of Energy

In order to reduce the risk that a number of entities generating,transmitting, or distributing electric power will not meet the June 1999Year 2000 readiness milestone, and to ensure that utility customershave adequate information about the risk of power outages in theirservice area, we suggest that the Department of Energy take thefollowing actions:

• Work with the Electric Power Working Group to ensure thatremediation activities are accelerated for the utilities that expect tomiss the June 1999 deadline for achieving Year 2000 readiness,including revising outage schedules to perform renovations prior tothe industry target date, where feasible, and adding resources ifnecessary to accelerate progress.

Appendix I


2000 Readiness


33

GAO Suggested Actions (Cont’d)

• Encourage state regulatory utility commissions to require a full publicdisclosure of Year 2000 readiness status of entities transmitting anddistributing electric power-- including 136 control areas and the 3,000entities operating North America’s distribution systems. Such disclosureshould include the current readiness status, the projected date thatreadiness will be achieved, the descriptions of the probable and worstcase scenarios, and a public version of contingency plans.

In response to our suggestions, an Energy official said that thedepartment agrees with the suggested actions in general. However, henoted that the department will probably not pursue the acceleration ofschedules for those organizations whose systems are substantially readyexcept for a small amount of work. Concerning the public disclosure ofreadiness status, he said that Energy plans to coordinate the issue ofpublic disclosure with state regulatory agencies.

Appendix I


2000 Readiness


34


Nuclear Regulatory Commission

To help ensure that all licensed nuclear power plants will identify andrectify any Year 2000 problems with their computer systems well beforeJanuary 1, 2000, and that the public and the electric power industry isgiven adequate information about the Year 2000 readiness status ofindividual nuclear power plants, we suggest that NRC take the followingactions:

• In cooperation with the NEI, work with the nuclear power plantlicensees to accelerate the Year 2000 remediation efforts amongthe nuclear power plants that expect to miss the June 1999deadline for achieving Year 2000 readiness, including revisingoutage schedules to perform renovations prior to the industrytarget date.

Appendix I


2000 Readiness


35


• Publicly disclose the Year 2000 readiness status of each of thenation’s operational nuclear reactors. The disclosure should includethe date when each nuclear power plant is expected to be Year2000 ready.

NRC officials stated that nuclear power licensees are required toreport their Year 2000 readiness status on July 1, 1999. NRC plansto focus its efforts on nuclear power plants that may miss the July 1,1999, milestone. NRC has completed audits of 12 nuclear powerplants and is currently in the process of determining whether or notto conduct 32 additional audits. NRC official told us that NRC willrelease the information on the Year 2000 readiness of individualnuclear power plants in July 1999.

Letter


Appendix II

Major Contributors to This Report Appendix II

Accounting and Information Management Division, Washington, D.C.

Keith A. Rhodes, Technical DirectorWilliam N. Isrin, Operations Research AnalystAnh Q. Le, Senior ADP/Telecommunications AnalystDaniel K. Wexler, Senior Information Systems AnalystMichael A. Tovares, Senior Information Systems Analyst

(511468) Letter

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GAOPermit No. GI00